by Rom Badilla, CFA – Bondsquawk.com
May 24, 2010
“Every silver lining has a dark cloud” -S.G.
Finally there is some decent news (I am trying to find positive news these days. Really!). Existing home sales for April increased 7.6 percent from the prior month to an annualized gain of 5.77 million hones. Economists were expecting an increase of only 5.1 percent in April while the National Association of Realtors revised the prior month’s reading from a gain of 6.8 percent to 7.0 percent. The jump is supported by the federal homebuyers’ tax incentive.
Now onto the bad news. While existing homes sales increased, the number of homes on the market increased as well, representing the biggest surge on a percentage basis since April 2000.
Existing Home Sales Inventory - Historical Chart
According to a Bloomberg article, Lawrence Yun, the chief economist for NAR stated that there will be no meaningful increase in home values this year or possibly next. This assessment follows the surge in inventory, rising foreclosure rates, and the “shadow inventory” where as many as 800,000 homes are in the process of foreclosure and an additional 2 million homes are deep in the serious delinquency phase.
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